The numbers behind wealth managers’ financial planning push

One question we did not ask, though, was how much wealth managers are making from their financial planning operations. After all, these companies have not invested significant sums in hiring financial planners out of the goodness of their hearts.

Thankfully, as a lot of the wealth managers we have covered are listed on the stock market, it is easy to see how financial planning arms are performing...

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In Brewin Dolphin’s latest full-year results, covering the period ending 30 September 2017, the wealth manager said financial planning income had contributed £20.8 million. By comparison, in the same period in the previous year, financial planning income was £17.5 million.

If figures for the half-year to 31 March 2018 are anything to go by, financial planning will be even more important for Brewin this year, as revenue rose 28% from £9.5 million in 2017 to £12.2 million. According to the six-month update, published in May, more than 17% of the funds from clients who invest with Brewin directly now receive the financial planning service.

There is less detail on future plans than is contained in the Charles Stanley report, and sadly nothing on the targets for individual adviser revenue. But there are some details about the company’s financial planning academy, which is taking on 12 new recruits this year.

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Charles Stanley published its financial results for the year ending 31 March 2018 last week. It was very easy to find the figures in the report (which is not always the case).

The numbers for its financial planning arm were pretty good: it raised £6.3 million over the period, an increase from £5 million last year. Revenues per financial planner increased from £268,000 to £369,000. And it increased the number of planners it has in the arm from 18 to 21.

Yes, there was an operating loss of £2.7 million. But for a new business this is something a company the size of Charles Stanley can absorb.

The wealth manager is not resting on its laurels though. Charles Stanley said it wants financial planning to represent 10% of the group’s total revenues. Given total revenue in the last financial year was £151 million, this would require at least a £9 million rise.

But Charles Stanley does have a plan for achieving this. First it will hire more planners. It warned this will lead to larger losses for that part of the business in the short term because it takes 18-24 months before a newly trained planner hits target revenues.

Those target revenues are the second part of the plan. It wants individual planners to make more money; target revenue per adviser has risen from £300,000 to £350,000.

‘In the longer term we believe this investment will lead to greater asset inflows, greater share of wallet, enhanced customer retention and better defensibility of revenue margins because the service meets a fundamental client demand,’ the financial report said. ‘In the process we expect it to enhance the group’s profitability and quality of earnings.’

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One other wealth management company made progress with its financial planning business recently. Rathbones bought the Scottish wealth manager Speirs & Jeffrey, and hinted heavily the 8,500 clients it also acquired would be given access to its financial planning arm.

Rathbones acquired Visions Independent Financial Planning in 2015 and has been growing it ever since and still operates under its own brand. Assets under advice at Vision grew from £1 billion in 2016 to £1.4 billion at the end of last year.

The wealth manager did not reveal how much money the financial planning division made. But in the financial results, fees from advice and ‘other income’ accounted for £14.8 million of revenue last year, compared with £12.5 million in 2016.

When we initially asked Rathbones about the size of its financial planning arm last month it declined to comment but later came back to us with answers to our questions.

These responses revealed the firm is currently in ‘build mode’ with its financial planning business which has 14 chartered financial planners and with a ‘substantial recruitment programme underway’. These advisers operate out of six Rathbones branches.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

One question we did not ask, though, was how much wealth managers are making from their financial planning operations. After all, these companies have not invested significant sums in hiring financial planners out of the goodness of their hearts.

Thankfully, as a lot of the wealth managers we have covered are listed on the stock market, it is easy to see how financial planning arms are performing...

One question we did not ask, though, was how much wealth managers are making from their financial planning operations. After all, these companies have not invested significant sums in hiring financial planners out of the goodness of their hearts.

Thankfully, as a lot of the wealth managers we have covered are listed on the stock market, it is easy to see how financial planning arms are performing...

Brewin Dolphin

In Brewin Dolphin’s latest full-year results, covering the period ending 30 September 2017, the wealth manager said financial planning income had contributed £20.8 million. By comparison, in the same period in the previous year, financial planning income was £17.5 million.

If figures for the half-year to 31 March 2018 are anything to go by, financial planning will be even more important for Brewin this year, as revenue rose 28% from £9.5 million in 2017 to £12.2 million. According to the six-month update, published in May, more than 17% of the funds from clients who invest with Brewin directly now receive the financial planning service.

There is less detail on future plans than is contained in the Charles Stanley report, and sadly nothing on the targets for individual adviser revenue. But there are some details about the company’s financial planning academy, which is taking on 12 new recruits this year.

Charles Stanley

Charles Stanley published its financial results for the year ending 31 March 2018 last week. It was very easy to find the figures in the report (which is not always the case).

The numbers for its financial planning arm were pretty good: it raised £6.3 million over the period, an increase from £5 million last year. Revenues per financial planner increased from £268,000 to £369,000. And it increased the number of planners it has in the arm from 18 to 21.

Yes, there was an operating loss of £2.7 million. But for a new business this is something a company the size of Charles Stanley can absorb.

The wealth manager is not resting on its laurels though. Charles Stanley said it wants financial planning to represent 10% of the group’s total revenues. Given total revenue in the last financial year was £151 million, this would require at least a £9 million rise.

But Charles Stanley does have a plan for achieving this. First it will hire more planners. It warned this will lead to larger losses for that part of the business in the short term because it takes 18-24 months before a newly trained planner hits target revenues.

Those target revenues are the second part of the plan. It wants individual planners to make more money; target revenue per adviser has risen from £300,000 to £350,000.

‘In the longer term we believe this investment will lead to greater asset inflows, greater share of wallet, enhanced customer retention and better defensibility of revenue margins because the service meets a fundamental client demand,’ the financial report said. ‘In the process we expect it to enhance the group’s profitability and quality of earnings.’

Rathbones

One other wealth management company made progress with its financial planning business recently. Rathbones bought the Scottish wealth manager Speirs & Jeffrey, and hinted heavily the 8,500 clients it also acquired would be given access to its financial planning arm.

Rathbones acquired Visions Independent Financial Planning in 2015 and has been growing it ever since and still operates under its own brand. Assets under advice at Vision grew from £1 billion in 2016 to £1.4 billion at the end of last year.

The wealth manager did not reveal how much money the financial planning division made. But in the financial results, fees from advice and ‘other income’ accounted for £14.8 million of revenue last year, compared with £12.5 million in 2016.

When we initially asked Rathbones about the size of its financial planning arm last month it declined to comment but later came back to us with answers to our questions.

These responses revealed the firm is currently in ‘build mode’ with its financial planning business which has 14 chartered financial planners and with a ‘substantial recruitment programme underway’. These advisers operate out of six Rathbones branches.

ADVICE

Under Mifid II rules, advisers will have to disclose costs and charges in full, separated clearly on an annual basis, issuing each and every client with a comprehensive financial statement. So how do advisers articulate their value?

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